EXHIBIT 10.2
SUPPLY AGREEMENT
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THIS AGREEMENT made as of this 18th day of November 1998 ("Effective
Date") by and between X.X. XXXXXX & CO., a Delaware corporation ("XXXXXX"), and
XXXXXX LABORATORIES, INC., a Nevada corporation ("BUYER").
WHEREAS, BUYER has obtained rights to certain Products (as hereinafter
defined) from XXXXXX and desires to have the Products supplied by XXXXXX;
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1 -- DEFINITIONS
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1.1 "Asset Purchase Agreement" means the Asset Purchase Agreement entered into
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between XXXXXX and BUYER dated September 18, 1998.
1.2 "Batch" means one (1) production lot of a Product as listed for each
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Product on Schedule 1.2.
1.3 "Contract Year" shall mean each consecutive twelve (12) month period
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commencing on_________, 1998 and ending on the first anniversary of such
date and each consecutive twelve (12) month period ending on an
anniversary of such date during the term hereof.
1.4 "Cost of Manufacture" has the meaning ascribed to such term in Section
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2.3.
1.5 "Initial Term" has the meaning ascribed to such term in Section 10.1.
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1.6 "Packaging" means the procedures of filling, inspecting, labeling,
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packaging and packing of the Products or any part thereof in accordance
with the Specifications. The terms "Package," "Packaged" and "Packaging"
in this Agreement shall have the identical meaning.
1.7 "Processing" means the compounding, component preparation, testing, and
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other procedures, or any part thereof, involved in manufacturing the
Products in accordance
with the Specifications. The terms "Process," "Processed" and "Processing"
in this Agreement shall have the identical meaning.
1.8 "Product(s)" means the pharmaceutical products listed on Schedule 1.8,
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meeting the Specifications. This definition may change subject to the
provisions of Section 12.1.
1.9 "Specifications" mean the procedures, requirements, standards and other
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items attached hereto as Schedule 1.9, as amended from time to time in
accordance with the provisions hereof.
1.10 "Syntex Facility" shall mean any facility used by Xxxxxxx-XxXxxxx-Syntex,
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or a successor to the ownership or use of such facility, in the supply of
Products to XXXXXX or its Affiliates.
1.11 Other Terms. Other defined terms used herein and not defined above shall
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have the respective meanings assigned to such terms in the Asset Purchase
Agreement.
ARTICLE 2 -- PROCESSING AND PACKAGING AND PRICE
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2.1 Undertaking.
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(a) Subject to the limitations contained herein, XXXXXX hereby agrees to
Process and Package or to have Processed and Packaged BUYER's orders
for the Products in the Territory and BUYER agrees to pay XXXXXX for
the quantity of Products so Processed and Packaged in accordance with
this Agreement; provided, however, XXXXXX shall supply Products in
(i) finished package form during the first two (2) years of the
Initial Term, and (ii) in bulk form during the third year of the
Initial Term and any extended term. Notwithstanding the foregoing,
if at any time during the first two years of the Initial Term, BUYER
obtains FDA approval to package any of the Products, BUYER at its
option, may commence ordering, subject to Section 3.3, all or any
portion of its orders for Products in bulk form, and, subject to the
limitations contained herein, XXXXXX shall comply with such orders.
XXXXXX shall not be obligated to Process and Package Products in
excess of the capacity limitations described in Sections 3.1 and 3.2.
(b) For the duration of this Agreement, BUYER hereby grants to XXXXXX a
royalty-free, non-exclusive license and right in the Territory to use
such of the Assets as are necessary or useful to XXXXXX in fulfilling
its obligations under
this Agreement. (For the avoidance of doubt, under the Asset Purchase
Agreement, XXXXXX retained ownership of the Assets outside of the
Territory.)
(c) The parties acknowledge that any of XXXXXX'x obligations hereunder
may be carried out, at XXXXXX'x election, by third party
manufacturers; provided that XXXXXX'x use of any third party
manufacturer, other than a Syntex Facility manufacturer, shall
require BUYER's prior written consent, which consent shall not be
unreasonably withheld. The use of any third party manufacturer shall
not relieve XXXXXX of its obligations under this Agreement.
2.2 Price and Payment.
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(a) During the Initial Term, the prices for Processing and Packaging the
Products shall be equal to the Cost of Manufacture plus **. The
prices in effect for the remainder of calendar year 1998 are set
forth in Schedule 2.2(a). Thereafter, the prices for Products may be
increased once in each calendar year by up to an amount equal to the
percent increase in the Producer Price Index for the Drugs and
Pharmaceutical Sector as reported by the Bureau of Labor Statistics
("PPI") over the prior twelve (12) months; **
(b) During any extended term following the Initial Term, the prices for
Processing and Packaging the Products shall be negotiated in good
faith by the parties.
(c) By October 31st of each calendar year of the term hereof, XXXXXX
advise BUYER in writing of the prices for the following calendar
year.
(d) The Products will be shipped to a location in the Territory
designated by BUYER, FCA (Incoterms 1990) XXXXXX'x manufacturing
plant. Title and risk of loss shall pass to BUYER upon delivery of
the Products to the common carrier.
(e) BUYER will pay in U.S. currency for each shipment of Products within
forty-five (45) days after the date the relevant invoice is received
by BUYER or the date of shipment, whichever is later.
2.3 Definition of "Cost of Manufacture". XXXXXX'x cost of manufacture for the
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Products (the "Cost of Manufacture") (as calculated in accordance with
generally accepted accounting principles and consistent with XXXXXX'x
current practices) shall be equal to the sum of:
__________
** Confidential Material Filed Separately with the Commission
(a) Costs of any third party manufacturers, utilities, materials,
indirect materials and supplies used in the Processing and Packaging
of Products;
(b) Wages of those employees directly employed in the Processing and
Packaging of the Products (or an appropriate portion of such wages
and salaries if such personnel are not employed exclusively in said
manufacture);
(c) Wages of employees directly employed in quality control, materials
management or related functions which are applicable to the
Processing and Packaging of Products and the salaries of the
supervisors of said functions (or an appropriate portion of such
wages and salaries if such personnel are not employed exclusively in
said manufacture);
(d) That portion of payroll taxes, benefits, social security payments,
vacation and bonus payments and other employee costs allocable to the
wages and salaries (except for severance, relocation, transfer or
other extraordinary items) included within the provisions of
subparagraphs (b) and (c) above; and
(e) That portion of XXXXXX'x manufacturing overhead expenses, based on
the manufacturing facility operating at full capacity during normal
business hours (one 8-hour shift), apportioned, in accordance with
generally accepted accounting principles and XXXXXX'x current
practices, to the manufacture of the Products supplied to BUYER.
2.4 Records of XXXXXX. XXXXXX shall keep records of its Cost of Manufacture
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in accordance with generally accepted accounting principles in the United
States. Such records shall be maintained by XXXXXX for a period of two
(2) years.
2.5 Audit. Not more frequently than once each year, BUYER at its expense
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through an independent auditor of its choice to whom XXXXXX has no
reasonable objection and subject to the provisions of Section 2.7, shall
have the right to conduct an examination or audit of said records of
XXXXXX in order to verify that amounts paid to XXXXXX hereunder are
correct. XXXXXX agrees to cooperate fully with the auditor and to provide
all reasonable access to records and employees necessary to promptly
complete this audit. To the extent Products are purchased by XXXXXX from
a third party manufacturer under a "cost" or "cost plus" arrangement and
XXXXXX has the right to audit such costs, then BUYER, at BUYER's expense
and reimbursement of any costs to XXXXXX, may elect to have XXXXXX conduct
an audit of such costs pursuant to such
rights and conditions as XXXXXX may have with respect to audits of such
third party manufacturer. Subject to such rights and conditions, XXXXXX
shall promptly disclose the results of such audit to BUYER.
2.6 Adjustments. In the event any examination or audit of the records of
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XXXXXX discloses an under- or overpayment hereunder, written notice of
such fact, specifying the amount and basis of the under- or overpayment
shall promptly be furnished to both parties by the person(s) performing
the examination or audit. In the event of an overpayment the amount
thereof shall be credited against future amounts owed to XXXXXX hereunder,
or if there will be no such future amounts, XXXXXX shall refund the
overpayment to BUYER within thirty (30) days of such notice. In the event
of an underpayment, BUYER shall pay the amount thereof to XXXXXX within
thirty (30) days after such disclosure.
2.7 Scope of Examination and Audit. The examination and audit provided for in
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Section 2.5 shall be restricted to those records of XXXXXX which relate to
the services provided hereunder and costs and expenses incurred hereunder,
and shall be undertaken for the sole purpose of verifying information
provided by XXXXXX and payments made to XXXXXX hereunder. The independent
auditor shall not disclose to BUYER any information obtained in the course
of its audit other than information relating solely to the accuracy of the
statements provided by XXXXXX and payments to be made to XXXXXX pursuant
to this Agreement. BUYER, its representatives and any independent auditor
appointed by it shall keep all information obtained in the course of any
examination or audit confidential, except to the extent disclosure of
under- or overpayment is contemplated herein. If the auditor determines
that XXXXXX has overcharged the BUYER by five per cent (5%) or more for
the Products purchased by the BUYER for the period audited, XXXXXX agrees
to promptly reimburse the BUYER for all costs and expenses incurred by
BUYER in having said audit conducted.
ARTICLE 3 -- FORECASTS AND ORDERS
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3.1 Forecasts.
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(a) At least thirty (30) days prior to each calendar quarter, BUYER will
provide XXXXXX with a written twelve (12) month rolling forecast of
the quantities of
each Product that BUYER expects to purchase during each of the next
twelve (12) months (the Twelve Month Forecast"); provided, however,
the first Twelve Month Forecast shall be attached hereto as Schedule
3.1(a)-I. Except as may be provided otherwise in this Section 3, the
forecast for each Contract Year will be limited to an amount not
greater than one-hundred thirty percent (130%) of the forecast for
the prior Contract Year. For purposes of bench-marking the current
forecast for the prior Contract Year to which BUYER will be limited
under this Section 3.1(a), attached as Schedule 3.1(a)-II is the most
recent Contract Year forecast.
(b) The first three (3) months of each Twelve Month Forecast (the "Three
Month Forecast") shall be firm and shall not have been changed from
the forecasted amounts for the same calendar months contained in the
prior Twelve Month Forecast.
3.2 Permitted Amount To be Ordered. BUYER shall submit a purchase order to
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XXXXXX referencing this Agreement each month as required, with a delivery
date of not less than ninety (90) days after the date thereof. The
quantities ordered will be no less than eighty percent (80%) of the Three
Month Forecast for such month and no more than the greater of one hundred
twenty percent (120%) of the Three Month Forecast for such month or an
additional Batch, provided raw materials are available for the amounts
over one hundred percent (100%) of the Three Month Forecast. XXXXXX will
use its reasonable efforts, but will be under no obligation, to supply
Product in excess of one hundred twenty percent (120%) of the Three Month
Forecast. Products, when delivered to the common carrier under subsection
2.2(d), shall not have an expiration date of less than twenty-four (24)
months(for both finished and bulk Products) from the date of such
delivery, except (a) for the bridging inventory described under Section
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3.4, and/or (b) as the parties may agree otherwise in writing on a case by
case basis. With respect to subsection (b), XXXXXX shall notify BUYER in
writing when and if it has Products which have an expiration date of less
than twenty-four (24) months (but in no event less than eighteen (18)
months) and BUYER shall notify XXXXXX within three (3) days of receipt of
such notice whether it wishes to accept such Products. In the event BUYER
accepts such short-dated Products and BUYER's customer(s) later return
such Products solely as a
result of their being short-dated, then XXXXXX shall reimburse BUYER for
the actual amount refunded or credited to BUYER's customer(s) for such
returned Products and the reasonable expenses related to processing such
returned Products. The record-keeping and audit provisions of Sections
2.4, 2.5, 2.6 and 2.7 shall apply mutatis mutandis to XXXXXX'x right to
audit BUYER's Product returns records pursuant to Section 2.2.
3.3 Minimum Order Size. The minimum size of any order for any Product shall
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be one Batch of such Product with larger orders being in whole number
multiples of a Batch. Subject to Section 3.2, there is no minimum order
size for any Product in finished package form. To the extent BUYER's
orders for the Product Norinyl 1/50 are less than the Batch lot size for
such Product stated on Schedule 1.2, BUYER shall purchase at Xxxxxx'x Cost
of Manufacture any bulk tablets that XXXXXX was required to manufacture or
purchase in order to meet BUYER's orders for the Product Norinyl 1/50 to
the extent such bulk tablets may not be processed into finished goods with
acceptable dating hereunder; provided, however, that BUYER shall purchase
all such bulk tablets (regardless of expiration dating) upon the
commencement of the third year of the Initial Term or, if earlier, at such
time as BUYER commences ordering Products in bulk form.
3.4 Bridge Inventory. Prior to the expiration of the Initial Term or extended
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term, as the case may be, if so requested by BUYER, XXXXXX shall use
reasonable efforts to assist BUYER in obtaining a stock pile of inventory
of the applicable Products to the extent such stock pile is necessary in
order to bridge the period beginning with such expiration and the
commencement of BUYER's manufacture thereof. BUYER shall be responsible
for providing sufficient notice to XXXXXX of the amount of inventory so
required by BUYER within the usual capacity limitations of XXXXXX'x
facility and/or a Syntex Facility.
3.5 Allocation of Product. In the event XXXXXX is unable to meet both BUYER's
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orders for Products hereunder and XXXXXX'x or its Affiliates' requirements
of oral contraceptive products (containing Active Ingredients) outside of
the Territory due to a shortage of Active Ingredients, then XXXXXX shall
allocate Active Ingredients available to it to the Processing of Products
hereunder in an amount equal to the percent which BUYER's purchases of
Products in the preceding six (6) months bears to the total
amount of (a) Products purchased by BUYER, and (b) oral contraceptive
products (containing Active Ingredients) supplied to XXXXXX or its
Affiliates in the preceding six (6) months.
3.6 Safety Stock. During the term of this Agreement XXXXXX shall maintain, at
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its expense and at a location mutually agreed by the parties, a safety
supply of inventory of each Product in bulk form (the "Safety Stock"). As
soon as reasonably practicable after the execution of this Agreement,
XXXXXX shall commence building the Safety Stock. The size of the Safety
Stock shall be an amount equal to three (3) months inventory of each
Product based on BUYER's most recent Twelve Month Forecast (for Products
other than any Bridge Stock).
3.7 Failure to Supply.
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(a) In the event XXXXXX fails or is unable to supply the quantities of
the Products ordered by BUYER to meet BUYER's requirements (within
the limits described in Section 2.1 above), BUYER may (i) purchase or
obtain so much as to meet its requirements or any portion thereof
from any other source or (ii) to the extent permitted by law
manufacture the same under the applicable Specifications and quality
control procedures. In such event, XXXXXX shall provide BUYER or
BUYER's contract manufacturer with all documents, data and other
information necessary or useful for Processing and Packaging the
Products at no cost for so long as XXXXXX is unable to supply
sufficient quantities of the Products to meet BUYER's requirements.
**
ARTICLE 4 -- SPECIFICATIONS
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4.1 Specifications. The Products shall be Processed, Packaged, stored and
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shipped in accordance with the Specifications.
4.2 BUYER'S Changes. The Specifications may be changed by BUYER, provided the
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Specifications at all times shall be in compliance with the Product
Registration, from time to time with XXXXXX'x consent which shall not be
unreasonably withheld, but not more often than twice per year unless
required by the FDA or other U.S. government agency. All such changes
shall be communicated to XXXXXX in writing, after which the parties shall
agree on the date of implementation of such changes as soon as reasonably
__________
** Confidential Material Filed Seperately with the Commission
practicable. If any such change results in obsolescence of any materials
specifically purchased by XXXXXX for Processing and Packaging of the
Products under this Agreement prior to being notified in writing by BUYER
of the change in the Specifications, BUYER shall reimburse XXXXXX for the
actual out-of-pocket cost of all such materials except to the extent the
quantity of such materials exceeds requirements therefor pursuant to
BUYER's forecasts. Upon being reimbursed and at BUYER's request, XXXXXX
shall promptly ship any such materials to a location designated by BUYER at
BUYER's expense. If any such change or proposed change to the
Specifications results in costs and expenses to XXXXXX, BUYER shall
promptly reimburse all such reasonable costs and expenses to the extent
that such costs and expenses are not included in XXXXXX'x revised Cost of
Manufacture and recovered within twelve (12) months of implementation of
the change.
4.3 XXXXXX Changes. XXXXXX may change the Specifications at any time upon
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sixty (60) days prior written notice to BUYER, provided the Specifications
at all times shall be in compliance with the Product Registrations. Any
changes to Specifications under this Section 4.3 shall be subject to
BUYER's reasonable objections thereto, provided that any objections to such
changes shall be delivered in writing to XXXXXX within fifteen (15) days of
BUYER's receipt of notice of such changes.
ARTICLE 5 -- RAW MATERIALS AND PACKAGING MATERIALS
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5.1 Supply. XXXXXX will supply all materials required for Processing and
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Packaging.
5.2 Title and Risk of Loss. Title and risk of loss to all materials provided
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by XXXXXX shall pass to BUYER upon delivery of the finished Products
incorporating such materials to the common carrier at XXXXXX'x
manufacturing plant. XXXXXX shall store and maintain all raw and packaging
materials in accordance with the Specifications and in compliance with all
applicable laws and regulations.
ARTICLE 6 -- QUALITY CONTROL; ADVERSE EXPERIENCES AND RECALLS
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6.1 Testing. XXXXXX shall perform quality control tests and assays on raw
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materials and the finished Products in accordance with the Specifications
and GMPs (as defined in Section 7.1(a)). Results of such tests and assays
as well as specific batch samples of Products manufactured under this
Agreement following the date hereof will be submitted to
BUYER for the first Batch of each Product during any Contract Year and each
fifth (5th) Batch in such Contract Year thereafter. In the event of any
such request, BUYER will review the data and samples submitted by XXXXXX
promptly and will advise XXXXXX of its acceptance or rejection of each lot
or batch of the Products not later than thirty (30) days after the date on
which results of the tests and assays and samples are received.
6.2 Samples. XXXXXX shall retain for at least one (1) year after the
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expiration date of the applicable lot or batch of Products a file sample
properly stored from each lot or batch of Products Processed or Packaged,
including market packages, sufficient to perform each quality control test
specified in the Specifications at least two (2) times.
6.3 Adverse Drug Experiences and Quality Complaints. XXXXXX shall be
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responsible for handling all Product complaints (including product quality
complaints and adverse drug experience reports) during the first six (6)
months following the date hereunder. To the extent requested by BUYER,
XXXXXX will provide reasonable assistance in providing data available to
XXXXXX relating to the Products for BUYER's regulatory annual reports
required with respect to such six months period. Thereafter, BUYER shall
be responsible for handling all such Product complaints related to all
Products. XXXXXX and BUYER shall promptly forward any Product complaints
received by either of them to the other no later than three (3) days
following receipt and shall provide assistance in investigating such
complaints as may be reasonably requested. Each party shall designate a
representative who will handle Product complaints activities for such party
and coordinate such activities with the other party. However, BUYER's
handling of complaints shall in no way waive, modify or diminish any of
XXXXXX'x obligations under this Agreement except as otherwise provided in
Article 8 hereof.
6.4 Recalls. Recalls of the Products from the market shall be the
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responsibility of BUYER and may only be initiated by BUYER. BUYER may
initiate a recall by notifying XXXXXX and, immediately thereafter, both
parties shall discuss appropriate alternatives, including whether a recall
is required and the method of implementing a recall. XXXXXX shall
cooperate with BUYER in the event of any recall, field alert or similar
event and provide such assistance in connection therewith as BUYER may
reasonably request. The costs of any such recall shall be borne (a) by the
party whose negligence, breach of this Agreement or other conduct resulted
in such recall, or (b) equally by the parties if neither
party's negligence, breach of this Agreement or other conduct resulted in
such recall.
ARTICLE 7 -- WARRANTIES
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7.1 XXXXXX Warranties. XXXXXX warrants that:
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(a) the Processing and Packaging and all materials furnished by XXXXXX or
any third party manufacturer pursuant to subsection 2.1(c) will
comply with the Specifications and with all applicable laws, rules,
orders and regulations, including all current Good Manufacturing
Practices ("GMPs") and will not infringe any currently existing United
States patents held by any person or entity;
(b) the Products, when delivered to the common carrier under subsection
2.2(d), shall neither be adulterated nor misbranded within the meaning
of the United States Food, Drug and Cosmetic Act, 21 U.S.C. (S)(S)301c
et. seq.; and
(c) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, XXXXXX
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.2 BUYER Warranties. BUYER warrants that:
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(a) to the extent that it provides any materials or engages in Processing
or Packaging with respect to the Products, all such materials,
Processing and Packaging will comply with the Specifications and with
all applicable laws, rules, orders and regulations, including GMPs;
and
(b) subject to XXXXXX'x compliance with the warranties stated in Section
7.1 above, the Products which BUYER distributes and sells will not be
adulterated or misbranded within the meaning of the United States
Food, Drug and Cosmetic Act, 21 U.S.C. (S)(S)301c et. seq.
7.3 Inspection.
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(a) XXXXXX agrees to permit BUYER's designated representatives to whom
XXXXXX has no reasonable objection to inspect XXXXXX facilities at
which the Products are Processed, Packaged, stored or tested for the
purpose of
determining compliance with applicable regulations and the
Specifications at reasonable times after reasonable notice during
regular business hours.
(b) XXXXXX will conduct routine quality assurance audits of its third
party manufacturer's facility at which Products are Processed,
Packaged, Stored or tested at least once in each calendar year.
Subject to the terms of XXXXXX'x supply contract with such third party
manufacturer, BUYER shall have the right to (i) accompany XXXXXX on
its inspections of such third parties' facilities at which the
Products are Processed, Packaged, Stored or tested, and (ii) receive
copies of information obtained by XXXXXX from such third party
relating to the quality, safety and regulatory status of the Products.
XXXXXX shall make commercially reasonable efforts to obtain the
consent of such manufacturer to the activities contained in items (i)
and (ii).
(c) BUYER's exercise of these rights shall in no way waive, modify or
diminish XXXXXX'x obligations under this Agreement.
7.4 Quality Control Evaluation. Within thirty (30) days after receipt of each
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shipment, BUYER will inspect and make a quality control evaluation of such
shipment (which shall include a certificate of analysis). In the event any
shipment or part thereof fails, or there is manifest cause for BUYER to
reasonably believe that any shipment or part thereof fails, to conform to
the Specifications or shall have been Processed, Packaged or shipped under
conditions which do not comply with the FDA requirements or the provisions
of this Agreement, BUYER may reject the same by giving prompt written
notice to XXXXXX specifying the manner in which it fails to meet the
requirements hereof. XXXXXX shall have thirty (30) days within which to
accept or reject BUYER's claims. BUYER may withhold payment for any
shipment of Products that fails to meet the requirements hereof.
7.5 Disputes. In the event of any dispute as to whether any shipment of
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Products fails in whole or part to meet the Specifications, such dispute
shall be promptly resolved by an independent testing organization of
recognized repute within the U.S. pharmaceutical industry mutually agreed
upon by the parties, the appointment of which shall not be unreasonably
withheld by either party. Until any dispute is resolved, BUYER will not
dispose of any nonconforming shipment without prior written authorization
from and agreement with XXXXXX. The fees and costs of such testing
organization shall be
borne by the party whose position is not sustained by the testing
organization.
7.6 Replacement Products. If any Products shipped hereunder are properly
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rejected by BUYER, XXXXXX agrees to ship as soon as reasonably possible
after notice of such rejection (or if there is a dispute with regard to
the rejection, after notice of the determination of the independent
testing organization) replacement Products either newly manufactured or,
with the consent of BUYER, reworked from the rejected shipment using an
FDA approved procedure with respect thereto. BUYER's exclusive remedy for
XXXXXX'x breach of Section 7.1, shall be to receive replacement or
reworked Product as provided herein.
7.7 Government Inspections/Communications. Each party shall promptly notify
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the other party of any government inspections or communications to or from
any governmental agency (including the reporting of adverse drug
experiences or field alerts) which might (i) adversely affect XXXXXX'x
ability to perform its obligations under this Agreement or (ii) result in
an inspection of the facilities at which XXXXXX, or its third party
manufacturer (upon receipt of notice thereof by XXXXXX from such third
party manufacturer), manufactures the Products. Communications or
inspectional findings resulting from such government inspections or
communications relating to Product Registrations received by either party
will be communicated to the other party and, if practicable, such party
shall provide the other party with a reasonable opportunity to provide
input in any response, investigation, or inspection.
ARTICLE 8 -- INDEMNIFICATION
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8.1 In Favor of XXXXXX. BUYER shall defend, indemnify and hold XXXXXX, its
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Affiliates and the officers, directors and employees of each harmless from
and against any and all claims, demands, losses, damages, liabilities,
settlement amounts, costs or expenses whatsoever (including reasonable
attorneys' fees) arising from or related to any claim, action or
proceeding made or brought against such party by a third party (i) as a
result of BUYER's use, promotion, sale and/or distribution of the Products
unless such liability arises from XXXXXX'x breach of any warranty or
representation herein, XXXXXX'x failure to perform any covenant herein, or
the negligent act or omission of XXXXXX in performing its obligations
under this Agreement or (ii) arising from the failure of BUYER to conduct
a recall of any of the Products requested by XXXXXX.
8.2 In Favor of BUYER. XXXXXX shall defend, indemnify and hold BUYER and its
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officers, directors and employees harmless from and against any and all
claims, demands, losses, damages, liabilities, settlement amounts, costs
or expenses whatsoever (including reasonable attorneys' fees) arising from
or related to any claim, action or proceeding made or brought against such
party by a third party as a result of (i) XXXXXX'x breach of any warranty
or representation herein, XXXXXX'x failure to perform any covenant herein,
or the negligent act or omission of XXXXXX in performing its obligations
under this Agreement or (ii) any claims of patent infringement arising out
of BUYER's sale of Products supplied hereunder which bear the message
referred to in Schedule 14.9 of the Asset Purchase Agreement.
8.3 Notice; Defense. In the event of any claim, action or proceeding for
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which a party is entitled to indemnity hereunder, the party seeking
indemnity ("Claimant") shall promptly notify the other party
("Indemnitor") of such matter in writing. Indemnitor shall promptly but
in no event later than thirty (30) days from date of notice assume
responsibility for and shall have full control of the defense of such
matter and Claimant shall fully cooperate in Indemnitor's handling and
defense thereof. Failure to assume the defense within the aforementioned
time period, shall constitute a waiver of the Indemnitor's rights to
assume the defense and the Claimant shall have the full right to conduct
the defense, settle or otherwise dispose of the claim at the Indemnitor's
expense. The Indemnitor shall have the right to settle or compromise
claims against the Claimant involving the payment of money only in
exchange for an unconditional release of Claimant. All other dispositions
of claims must be approved by Claimant.
8.4 Limitation. Notwithstanding any provision of this Agreement (except for
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Sections 3.6(b) and (c))which might otherwise be to the contrary neither
party shall be liable to the other for lost profits or other consequential
damages of any kind.
ARTICLE 9 -- CONFIDENTIALITY
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During the term of this Agreement and for a period of three (3) years thereafter
except as otherwise provided in the Asset Purchase Agreement, no party shall,
without the specific written consent of the other party, disclose to any third
party (except to governmental health or regulatory authorities to obtain and
maintain the registration of the Products or other disclosures required by law)
or use for its own purposes any confidential information which is received from
the other party or its agent(s) pursuant to this Agreement concerning the
Products or the other party's business unless such information:
(a) was or becomes public through no fault of the receiving party, or
(b) was obtained from a third party legally entitled to use and disclose
the same, or
(c) was known to the party prior to entering into this Agreement.
For this purpose, Assets shall be deemed BUYER'S property in the Territory and
not subject to any obligation of confidentiality by BUYER with respect to the
Territory.
ARTICLE 10 -- TERM AND TERMINATION
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10.1 Term. The term of this Agreement shall be, unless terminated earlier as
-----
provided herein, for a period of three (3) years commencing on the
Effective Date (the "Initial Term"). This Agreement may be extended upon
the mutual agreement of the parties. BUYER shall notify XXXXXX in writing
of its desire to extend the term of this Agreement at least nine (9)
months prior to the expiration of the Initial Term.
10.2 Termination. Either party shall have the right to terminate this
------------
Agreement, immediately upon written notice to the other, during the
Initial Term and any extension thereof:
(a) if the other party is dissolved or liquidated, files or has filed
against it a petition under any bankruptcy or insolvency law, makes
an assignment for the benefit of its creditors or has a receiver
appointed for all or substantially all of its property and is not
withdrawn within thirty (30) days of appointment;
(b) if the other party shall commit any material breach (whether
remediable or not) of its obligations under this Agreement and, if
remediable, shall fail to remedy the breach within (90) days after
receipt of written notice from the non-breaching party describing
such breach;
(c) as to any Product, upon BUYER's or its third party manufacturer's
manufacture of readily saleable quantities of such Product under
BUYER's ANDAs or BUYER's receipt of FDA approval to manufacture any
Product at a BUYER designated facility; provided, however, unless
otherwise agreed by the parties in writing, XXXXXX shall fill, and
BUYER shall purchase, the quantities of Products contained in any
firm purchase orders outstanding as of the date of such notice of
termination.
10.3 Without Prejudice. Termination of this Agreement, due to the fault of
------------------
either party, shall be without prejudice to any other rights or remedies
then or thereafter available to either party under this Agreement or
otherwise.
10.4 Products and Materials. Promptly after expiration or termination, XXXXXX
-----------------------
will complete work on all in-process Products. BUYER will pay XXXXXX the
price determined pursuant to Section 2.2 for Products Processed or
Packaged by XXXXXX. However, in no event shall the quantity of Products
to be purchased by BUYER under this provision exceed BUYER's purchases for
the preceding six (6) month period.
ARTICLE 11 -- GOVERNING LAW
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This Agreement shall be governed by and interpreted and enforced in accordance
with the laws of the State of Illinois of the United States of America,
regardless of the choice of law principles of Illinois or any other
jurisdiction.
ARTICLE 12 -- MISCELLANEOUS
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12.1 Changes to Products Definition.
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(a) BUYER shall have the right from time to time, and upon written notice
to XXXXXX, to revise Schedule 1.8 by removing pharmaceutical products
listed thereon.
(b) In connection with the Technology Transfer activities described in
the Asset Purchase Agreement, XXXXXX shall provide to BUYER
reasonable assistance to locate a supplier of raw materials for the
manufacture of the Products, such assistance is intended to take the
form of activities such as identifying potential suppliers and
facilitating introductions with such suppliers. Nothing contained in
this subsection (c) shall be construed as imposing on XXXXXX any
obligation to obtain or secure a supplier on behalf of BUYER.
12.2 Costs. Each party shall bear its own costs and expenses incurred in
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negotiating this Agreement.
12.3 Notices. Any notice required or permitted to be given hereunder shall be
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deemed sufficient if sent by facsimile letter or overnight courier, or
delivered by hand to Seller or Buyer at the respective addresses and
facsimile numbers set forth below or at such
other address and facsimile number as either party hereto may designate.
If sent by facsimile letter, notice shall be deemed given when the
transmission is completed if the sender has a confirmed transmission
report. If a confirmed transmission report does not exist, then the notice
will be deemed given when the notice is actually received by the person to
whom it is sent. If delivered by overnight courier, notice shall be deemed
given when it has been signed for. If delivered by hand, notice shall be
deemed given when received.
if to Seller, to:
X.X. Xxxxxx & Co.
0000 Xxx Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000 XXX
Attention: Xxxxxxx Xxxxxx
Director, US Materials Management
Fax number: (000) 000-0000
with a copy to: Assistant General Counsel, Commercial
Fax number: (000) 000-0000
if to Buyer, to:
Xxxxxx Laboratories, Inc.
X.X. Xxx 0000
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxx
Fax number: (000) 000-0000
with a copy to: Legal Department
Fax Number: (000) 000-0000
No notice by telecopy shall be valid unless confirmed by registered,
airmail letter dispatched within twenty-four hours after dispatch of the
telecopy. Notices shall be deemed to be served as of the earlier of (i)
receipt or (ii) twenty-four hours (in the case of a telecopy) after
dispatch. Any party may, from time to time, notify the other of a
substitute address or telecopy number for notices in the manner set forth
herein.
12.4 Survival. The provisions of Articles 8, 9 and 11 and Sections 2.2(e),
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2.4, 2.5, 2.6, 10.3
and 12.4 shall survive the expiration or other termination of this
Agreement.
12.5 Entire Agreement. This Agreement, together with any Schedules hereto and
----------------
the Asset Purchase Agreement, constitutes the entire agreement between the
parties concerning the subject matter hereof; it may not be modified or
amended except in writing signed by all parties. All agreements or
arrangements (if any) among the parties executed prior to the date hereof
(except for the Asset Purchase Agreement), whether written or oral,
relating to the subject matter hereof are hereby canceled and superseded.
12.6 Headings. Headings are inserted for convenience and shall not by
--------
themselves determine the interpretation of this Agreement.
12.7 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but together constituting one
agreement.
12.8 Assignment. Except as otherwise provided in this Section, neither party
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may assign or delegate any right or obligation hereunder without the prior
written consent of the other party, which consent shall not be
unreasonably withheld, and any attempted assignment or delegation in
violation hereof shall be void. BUYER and XXXXXX may each assign all of
its rights and obligations hereunder to an Affiliate on notice to and
without the necessity of securing the other party's consent, subject to
and for so long as such assignee remains an Affiliate of the assignor. In
addition, XXXXXX may assign all of its rights and obligations hereunder to
a purchaser or successor of all or substantially all of the assets or
business of XXXXXX.
12.9 Waiver of Default. No waiver of any default hereunder by any party or any
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failure to enforce any rights hereunder shall be deemed to constitute a
waiver of any subsequent default with respect to the same or any other
provision hereof. No waiver shall be effective unless made in writing
with specific reference to the relevant provision(s) of this Agreement and
signed by a duly authorized representative of the party granting the
waiver.
12.10 Not for Benefit of Creditors. The provisions of this Agreement are
----------------------------
intended only for the regulation of relations between the parties. Except
as expressly provided in Article 8 (and then subject to the limitations
stated in such Article), this Agreement is not intended for the benefit of
any person, firm or entity not a party hereto and no rights are granted to
such third parties hereunder.
12.11 Force Majeure. If any party is prevented from performing any obligation
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hereunder by reason of fire, explosion, strike, labor dispute, casualty,
accident, lack or failure of transportation facilities, flood, war, civil
commotion, acts of God, any law, order or decree of any government or
subdivision thereof or any other cause beyond the reasonable control of
such party, then such party shall be excused from performance hereunder to
the extent and for the duration of such prevention, provided it first
notifies the other party in writing of such prevention. The foregoing
shall not apply to any prevention due to any governmental regulatory
action resulting directly from the fault of XXXXXX or a third party
manufacturer designated by XXXXXX under Section 2.1(c).
12.12 Publicity. Neither XXXXXX nor BUYER, nor any Affiliate thereof, will
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issue or cause publication of any press release or other announcement or
public communication with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party,
which consent will not be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
XXXXXX LABORATORIES, INC. X.X. XXXXXX & CO.
BY /s/ XXXXXX XXXXXXX BY /s/ XXXXX X. XX XXXXXXX
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Title Secretary Title Authorized Representative
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